Issuing new norms on non-convertible debentures (NCDs), the Reserve Bank of India (RBI) on Wednesday said NCDs may be issued at face value carrying a coupon rate. Similarly, it can be issued at a discount to face value as zero coupon instruments, as determined by the corporate.
The central bank in a notification said corporates will have to disclose their financial position according to the standard market practice to the prospective investors. ?The auditors will certify to the investors that all the eligibility conditions set forth in these directions for the issue of NCDs are met by the corporate,? it added.
These directions will come into force with effect from August 2, 2010.
The RBI has said NCDs might be issued in denominations with a minimum of Rs 5 lakh on face value and in multiples of Rs1 lakh.
The total amount of NCDs proposed to be issued would be completed within a period of two weeks from the date on which the corporate opens the issue for subscription, the central bank said. A corporate will be eligible to issue NCDs only if the it has a tangible net worth Rs 4 crore.
As per the latest audited balance sheet, the corporate would be sanctioned working capital limit or term loan by banks or all-India financial institutions.
The borrowal account of a corporate is classified as a standard asset by financing institutions.